2018 (11) TMI 1258 - HC - Income Tax

Admissions made u/s 132(4) - Additions were made with respect to a Chit carried on by the assessee, the rental income, loans availed by the assessee, i. e. , and those availed from individuals as also from financial institutions - addition with respect to the DRAWS indicated in the note-book - adoption of the multiplier as contended by the assessee - Held that - AO adopted 1000 as the multiplier for the draw. This is not supported by any evidence unearthed, The Draw is a distinguishable item and the assessee s version has to be accepted especially in the context of the confirmations produced before the A. O. In such circumstances, we are of the opinion that the assessee s contention that the multiplier was 100 is more probable, which also stands supported by the confirmations from the various subscribers. Assessing Officer having not obtained any other material to prove that the multiplier is 1000 , the adoption of such multiplier can only be said to be a mere surmise or conjecture. We also notice that the figure shown against Draw is clearly distinguishable and a separate multiplier is also possible of easy identification. We, hence, uphold the order of the Tribunal to that extent. Now we are concerned with the multiplier contended of 10000 for individual loans and 100000 against institutional loans we notice that in the course of search the assessee was seen to have launched a prosecution under Section 138 of the Negotiable Instruments Act on the dishonour of a cheque of ₹ 4, 00, 000/-. The contention of the assessee was that the loan was only of ₹ 14, 000/-. In such circumstances, we do not think any credence can be placed on the submission of the assessee that with respect to the individuals the multiplier to be applied is 10000 and that to the institutions 100000 . Even with respect to certain individuals, the assessee had stated on oath that the multiplier to be applied is 100000 . This has to be applied across the board to all the individuals, since there is no substantiating material produced; as confirmation from the individuals. The assessee has also no explanation as to how the multiplier can be applied differently when the figures and names are noted without any distinguishable marks. We, in the above circumstances, answer the questions of law in favour of the Revenue and against the assessee; but, however, confirm the order of the Tribunal with respect to the Chit transaction directing the adoption of the multiplier as contended by the assessee. The Assessing Officer shall re-do the assessment in accordance with the directions herein above.

Issues:
1. Assessment completed under Section 153A read with Section 143(3) based on entries in a recovered note-book and sworn statement.
2. Dispute regarding multipliers for Chit, rental income, and loans from individuals and financial institutions.
3. Tribunal's direction to adopt assessee's multiplier contention for all transactions.
4. Questions of law regarding corroborative material, onus of proof, and application of multipliers.
5. Assessment of interest income from Chit and loans received post search.
6. Evidence from recovered note-book and confirmations from subscribers.
7. Application of multipliers for different categories of transactions.
8. Contention on individual and institutional loan multipliers.
9. Discrepancies in loan amounts and multipliers applied.
10. Tribunal's decision and directions for reassessment.

Analysis:
1. The assessment was conducted post a search under Section 132 of the Income Tax Act, 1961, for the assessee engaged in financial services for the years 2003-04 to 2006-07. The additions were based on entries in a recovered note-book and a sworn statement. The dispute revolved around multipliers for Chit, rental income, and loans from individuals and financial institutions.

2. The Tribunal directed the Assessing Officer to adopt the multipliers as contended by the assessee for all transactions, citing lack of corroborative material. The interest income from the Chit and loans received post search were key areas of assessment.

3. The questions of law focused on the need for corroborative material, onus of proof, and the application of multipliers. The Tribunal's decision was challenged based on the evidence from the note-book and sworn statements.

4. The Tribunal analyzed the recovered note-book entries, distinguishing figures for individuals, financial institutions, Chit, and rental income. The application of different multipliers for these categories was crucial in determining the correctness of the assessments.

5. The Tribunal upheld the assessee's contention on rental income multiplier but scrutinized the major income addition from the Chit transactions. The Tribunal's decision on applying the correct multiplier was crucial for reassessment.

6. The evidence from the note-book entries and confirmations from subscribers played a vital role in determining the appropriate multipliers for different transactions. The Tribunal's reliance on this evidence influenced the final decision.

7. The application of multipliers for different categories of transactions was a contentious issue. The Tribunal's decision to uphold the assessee's contention based on confirmations from subscribers was pivotal.

8. The dispute over individual and institutional loan multipliers was analyzed, with discrepancies in loan amounts and multipliers applied. The Tribunal scrutinized the evidence to determine the correct multiplier.

9. The Tribunal highlighted discrepancies in loan amounts and multipliers applied, emphasizing the importance of substantiating material. The decision was based on the credibility of the evidence presented.

10. In conclusion, the Tribunal's decision was partially upheld, with directions for reassessment. The questions of law were answered in favor of the Revenue, emphasizing the importance of accurate multipliers in the assessment process.

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